Phil Schiller says Apple would never make a 'cheap' iPhone - Page 2

Is it not the case that whilst iPhone sales are growing, the world market for smart phones is growing faster. This is possibly true of Tablets to. If this is the case then Apple's percentage of total market in both categories will start to shrink. If that is the case, and its an if, It follows that Apple's percentage of the profits will also shrink unless Apple can increase their profits. I guess my concern is that Apple becomes a highly profitable irrelevance, having been the game changer that everyone sort to emulate. If it worked for Apple before, why not cut the market up into price points and make the best iPhone in each segment, with no need for discussion of "cheep" or "cannibalisation" ?

 

 

You are taking Jobs comments out of context. He said the current at the time smaller form factor tablets were dead on arrival. He never said a smaller tablet under different circumstances wouldn't make sense. He was looking at the market at that point in time. In retrospect he was right. None of those tablets at the time did well. 

 

Jobs was also famous for telling people one thing and doing another. Probably to keep the competition on its toes. 

Edited by TBell - 1/10/13 at 5:41pm

That person said 50% of the profits, which is very different from 50% of the units that you probably read it as.

 

He was referring to the competition at the time and for the uses he had in mind.

 

The iPad mini has the same pixel density as the iPhone 3GS, which means their interface elements are the exact same size. He obviously didn't think the iPhone wouldn't work well.

"People" also said Apple needs to get out of the Mac hardware business and license Mac OS to Mac clone makers to win against Microsoft Windows 95.

I think the only reason that would make sense for Apple to release a lower-cost anything, is to protect their iOS platform (apps/music/etc.) in which users and developers are invested. But I might be wrong even in this one reason.

 

He said both, which is easy to miss:

That's certainly true.

However, consider that the iPod Touch starts at $299. Now, add cellular capability (extra electronics, antennae, microphone, and bigger battery) and explain how you can reduce the price enough to get it to sell for $99 to $149 as has been proposed.

Just can't happen - not without seriously cutting corners which Apple isn't likely to do.

Yes, he did not say "cheaper". He said "cheap"!

 

I bet they can make a decent phone for $300 and make a hefty profit. Their margins are already excellent on their current iPhone 5.

 

They will have to have a "cheaper" phone to address most of the world that can't afford an expensive phone. And anyone is better off with expensive product.

 

Google did it! (I know, it's not LTE).

 

Stuff always gets cheaper. My MacSE cost my $2500 (on sale, no hard drive). 20 meg HD on a fire sale: $400. My dot matrix printer was $500. A new 3rd party keyboard back in the early 90's was $150!!! The good ol' days.

I don't think so. The appeal of the iPhone is the Internet without compromise (flash notwithstanding). How would you limit it to sell as a feature phone? No apps? No camera?

I think they will just minor upgrade the 4 to be $300 with no contract when the 5S come out.

You mean like putting a non-retina display in their new iPad mini, when they are putting Retina displays in all of their other newly introduced products as fast as they can?

The iPad mini doesn't represent the best Apple can do in that area, they made compromises to hit a certain price point. Why, if not to gain market share? So why not in a phone as well?

Shaw Wu.

Spring 2018 : Tim Cook announces that from now on, the Apple enormous recurrent revenues driven from immaterial content (advertising, music, films, press ..) enable the company to distribute its electronic consumer products at 99 cents unique price (at this point, the French people, who always like to complain, argue that this is unfair, because 99 Euros cents are a lot more than 99 US $ cents.

 

At this point, analysts just give up : recognizing that they will never understand Apple business, except that it is exceptionnaly profitable, they simply strongly advise to buy Apple shares at any price.

They weren't aiming for a price point when they went non retina, they were aiming for a battery life.

Retina displays are battery monsters. Even with the battery in an iPad 3 or 4 it can get dicey. Putting that tech in a device with half the battery would be insane as that 'up to' is the one tech spec that everyone can understand and looks for.

 

So, because of 34% in screen area, his comment is complete garbage?

Not only that, but I am pretty sure they were concerned about yields. Just my .02.

 

 

The appeal of such a phone would be the same as it is to those people who prefer using a feature phone over a smart phone. Or an iPod nano over an iPod touch. Not everyone needs apps or even the internet on their phone, in fact a majority of mobile phone owners don't. There is clearly a market there and what is currently available is complete crap.

 

Furthermore, who's to say Apple couldn't put mobile Safari on a feature phone?

What is the point of having iOS on a phone without apps??

Is there not s risk that always selling last years IPhone at a cheeper and cheeper price, dilutes your brand? Would it not be better to make a specific phone for a specific price point (like the iPods) and so avoid all possibility of feeling fobbed off with last years model? From my experience of living in the Middle and Far East , people looking to get a bit of the latest material thing, can be very sensitive to the notion that they have just spent their very very hard won cash on something nearly two years behind the curve.

And reasonable battery life translates to thinner and lighter.

 

AppleTV uses iOS... it doesn't have apps... Is it a pointless device?

 

I don't think people understand why Apple moved into the phone business to begin with. The portable media player market was dwindling - it was shifting towards mobile phones; smart phones in particular. Apple saw this happening before it did and was able to gracefully make the transition.

 

Media players as media players are going to completely die off soon. The best selling iPod is the iPod touch right now. If Apple wants to get the iTunes ecosystem into more hands, then why not tap into the massive feature phone market?

 

… You pick the phone you want. You're not told what phone to get and you're not given a phone; you get to pick it yourself. I fail to see how anyone who isn't an idiot would consider going to a store, looking at phones, seeing all the options, and specifically picking last year's model to be anything remotely close to a "hand me down".

 

I figure "fobbed off" and "hand me down" are synonyms, yeah?

 

That's not at all the same argument.

 

These sentences are a massive contradiction.

 

"Single-purpose devices are dying off. Apple should make a single-purpose device."

 

I mean come on!

Honestly I think if Apple could have made the mini thin and light with incredible battery life plus retina at the price point they wanted to hit they would have done so. Apple has never been afraid of cannabalizing itself and that truly would have been "game over" for all the other smaller tablets.

Apple has a subset of iOS on the iPod Nano..also the Apple TV...... Why not an Apple feature phone? Designed from the ground up for that purpose, no corners cut, the best phone for a group who want a limited set of functions at very good value, and that introduce them by the millions to a range of Apple products they can aspire to.

But.... But... The rumor mill... Um, they said a really reputable person said you will. Now I am confused. I need prozac now. See what you did?

 

Huh? I didn't say that, don't use quotes.

 

Furthermore, how is a phone+media player a single purpose device? A device with media playing capabilities, plus phone, texting, some data services, etc.

 

It's not? Why not? The iPod nano has a fixed set of "apps" just as the AppleTV. Why couldn't there be a phone with a fixed set of "apps" as well? Sorry, if your head is stuck in the clouds, but a vast majority of people around the world don't need or even want a smart phone or could even afford the data plans.

If you say so ... I find it interesting that they were able to support retina in the iPad (3G) without a massive size increase from the iPad 2. I've never had any issues with the battery life in my iPad (3G).

But assuming there are factors there beyond my understanding that make one feasible and the other not, there's still the timing of the release.

If Apple isn't competing against Google and Amazon, and its generally assumed Apple will release a Retina iPad mini this year, then why rush a compromised product to market before it's ready? Why not just take their time and release the iPad mini when it was perfect? Why take a step back with a low-res display at all?

 

If you're right, that the market is nearing saturation (and I don't think you are) and Apple is just recycling customers (again, doubtful), then who would you rather be?

 

A phone maker with a customer base that upgrades so they can run better and faster apps.

 

or

 

A phone maker with a customer base that mostly buys cheap phones, not the flagship big-screen wonders; doesn't really buy apps or surf the web, so doesn't really need to upgrade that often, if at all.

 

As a rule, Apple doesn't take part in races to the bottom, and I imagine this will be no exception.

 

Looking at Phil's comments:

 

 

 

I dunno, that could be quite significant

 

Most of the Android sales volume is at the cheap end of the market. Apple, we assume by their completely disproportionate profits, is running things at the expensive end of the market.  Phil has noticed that while the Chinese market has gone from non-smartphone to cheap smartphone. Where will it go next? Back down to non-smartphone, or up to premium smartphone, where Apple seems to be raking in the lion's share of the cash?

 

Two rules from the Book of Phil:

 

Skate to where the puck is heading.

Aim for customers who are the most recession-proof.

WSJ pushes this idea every time hedge funds need the price to drop on the stock.

 

The quote box means quotes; don't worry. While you did not say that exactly, you said it implicitly.

 

… Getting a little pedantic here.

 

Okay, so a crap phone like every phone before the first iPhone, then. Apple should make one of those? Really? They should make the phones we didn't want to have five years ago because… what, we magically want them again?

Exactly what I was trying to say. You did a better job though.

I didn't think Apple would make a cheap iPhone until I heard the official denial. They weren't going to revisit the "Newton." They weren't going to make a 7" iPad. They weren't going to get involved in Games. I think have the Apple products I have are things they weren't interested in pursuing. An executive at a company talking to the news media only is going to say things that make the company money or prevent the company from losing money. So don't "bank on" anything a top exec has to say. Of course, he just might be telling the truth.

The problem is that people buy the iPhone because it's "exclusive". If they were to release a low-end, cheap iPhone, they would lose many customers, instead, in my opinion.

The success of the iPhone relies, for a big portion, exactly on it being expensive and, in the first months after a new model comes out, hard to obtain (because it's always out of stock).

 

It's the same reason why people buy Ferrari cars, for example.

It's not just for the top performances (which are necessary, but not enough: it's not a conditio sine qua non): it's because of the emotional value of acquiring something exclusive, and waiting years for it.

A cheap iPhone would be a disaster (for the company) just like would be a cheap Ferrari car (and if you look at their cousin Maserati, you can see that really happened in history).

 

In the first months, sales would likely explode. But then, when the product becomes mass, it will lose its appeal. Apple would be perceived just like "another phone manufacturer", just like Samsung (if you asked somebody who owns a Samsung phone why they bought it, they may answer "because it's a good phone", but they are unlikely to say "because it's a Samsung", unless they are implying with that a reference to the intrinsic quality of the product, not the brand).

This is different. This is not about technology - its about price. What exactly could be done to make the iPhone cheaper and still provide a full IOS user experience without cheapening the brand whilst retaining the level of sales of the present 'high end' iPhone?  Part of the allure of the iPhone is that it is aspirational. 

The only way they'd stop is if we had a leaderboard of which one spouts the most rubbish. We know who would come top but they'd only stop after naming and shaming the persistent liars because they rely on people forgetting from one year to the next. What's worse is how they cite their sources and claims as being reliable and factual:

http://www.bloomberg.com/news/2013-01-09/apple-said-to-develop-cheaper-iphone-model-for-late-2013.html

"Apple Inc. (AAPL) plans to sell a smaller, cheaper version of the iPhone as soon as this year, said a person familiar with the plans.

Apple, which had been working on a more affordable smartphone since at least February 2011, is weighing retail prices of $99 to $149 for a device that would debut in late 2013, at the earliest, according to the person, who asked not to be named because the negotiations are private."

http://www.digitimes.com/news/a20130108PD206.html

"Apple will roll out a low-cost version of the iPhone for China and other emerging markets in the second half of 2013, according to supply-chain sources."

http://bgr.com/2013/01/02/iphone-5s-release-date-colors-279254/

"multiple screen sizes could allow Apple to better address emerging markets with a lower-cost iPhone."

http://online.wsj.com/article/SB10001424127887324391104578230060513922882.html

"Apple Inc. is working on a lower-end iPhone, according to people briefed on the matter, a big shift in corporate strategy as its supremacy in smartphones has slipped."

I wonder if it was the WSJ article that prompted Schiller to respond. Apple and the WSJ seem to have a closer link than with most other media outlets for whatever reason.

So simple rules going forward:
- new products: pics or they know nothing (blurry ones will be scrutinised)
- rumours from any of the following are suspect: digitimes, bloomberg, WSJ, Topeka, Shaw Wu, Piper Jaffray, any analyst

It seems Macrumors have done this already:

http://guides.macrumors.com/Category:Analysts

You can see they are usually fairly inaccurate and rarely over 50/50, which is about as good as anybody would get really. Predictions on this forum are more accurate than that, maybe that's why investors come here.

Why are we so stuck with the idea that a phone at a different price point has to be a crap smart phone? Is a iPod Nano a crap iPod Touch? They surely have a different job to do. There is neither the affordability not the network to sustain highly complex smart phone purchase over the vast majority of this planet.

 

The funny thing is that it's not exclusive.   A couple hundred million have been sold. Ten year olds have them.  Homeless people have them.   

 

The iPhone is the last phone anyone should own if they really want to be exclusive or different.

 

Ironically it's this delusional thinking that convinces me that Apple really can put out a cheaper model, and yet other customers would remained convinced that they're still "elite" --  because they have the more expensive version.   See?  Works out perfectly.

The iPod Nano and the iPod Touch are different products, under every possible aspect. Abell is clear on that: different technology (one has a big screen and is powered by iOS and so on), different occasions of use (one is just for music, ideal for running and so on; the other one is a "complete media device", able of running apps and games, browsing the Internet, and so on) and, mostly important, different target customers.

Some people buy both an iPod Nano (that they use when practicing sports, for example) and an iPod Touch (to be used for all its functions).

 

You can't do that with an iPhone. At least, not as long as you run it with iOS (and the whole purpose of creating a mass iPhone is for increasing the market share of iOS).

 

"Exclusivity" is also about the difficulty of obtaining it.

As long as you have to pay 730€ for it, you likely have to save money somehow. True, with carrier subsides you can pay it much less... But, eventually, carriers have to get the money back (plans with the iPhone are much more expensive).

So, even if most people can eventually buy it (unlike a Ferrari), they often have to make an effort, and that still preserves the "exclusivity" of the phone.

 

Exclusivity is also about being impossible to find iPhones in the months just after the launch of the new model.

 

And... When the iPhone 4/4S became too "mainstream", there you are with the iPhone 5, with a completely new, recognizable design. And immediately your "old 4S" becomes old, and you start admiring your friend that has the new one.